Thursday, October 02, 2008

Voyager Learning Company First Half 2008 Update

No SEC filing for the first half which is becoming something of a broken record for Voyager. The company held a conference call for investors which did motivate some analysts to participate in contrast to some prior calls.

Following are some selected quotes and those about the potential sale and valuation of the business are interesting.

Brad Almond

With that said, when we last provided an update via our July 22 press release, we anticipated that we would file our 2006 10-K by July, 31, 2008. We have obviously slipped from that target. We are in the final stages of preparation for the release of the 2006 10-K and expect to have it filed before the end of this month. We expect to file our 2007 10-K approximately four to six weeks after the filing of the 2006 10-K. We have been preparing the 2007 results and audit work in parallel with 2006 efforts and such work has been progressing very well to date.

Hoping you would help me through what the implied free cash flow for your – for the firm will be, so let me just show – let me walk through my math and you can tell me where I am off. So that $19 million your current cash, $45 million from the tax refund, $25 million in operating cash flow, gives you about $89 million, less the uses of cash $5 million from the settlement, $4 million from the wrap-up of the legacy corporate, $3 million from the shut down of the headquarters. So if you expect to have $70 million at year-end, by my math you are generating about $20 million in free cash flow. Is that wrong?

Brad Almond

You are essentially right. We’ve – the math you’ve done, you add up all the pieces and our range would be – these are actually out at the highs and lows, all those ranges that I gave, you probably see something more in the $73 million to $83 million—

Doug Asiello – Invesco

Yes.

Brad Almond

But however to account for any unknowns out there and therefore I gave a range of $70 million to $80 million.

Doug Asiello – Invesco

Alright. Okay, so let me ask a followup then. My enterprise value for your firm is roughly $100 million and you are generating $20 million in free cash flow. That’s five times free cash flow. And then I guess if you layer in SG&A cost and corporate overhead, I have a hard time believing there is not some strategic buyer out there that hasn’t thought that this is – this would be very easy to wrap – to roll up into their existing franchise and sales force at – and then kind of wipe out a good chunk of SG&A and corporate overhead at a extremely inexpensive valuation. What’s wrong with my analysis?

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Michael Cairns

Michael Cairns has served as CEO and President of several technology and content-centric business supporting global media publishers, retailers and service providers. He can be reached at michael.cairns@outlook.com and is interested in executive management and consulting, board and/or advisory positions. I am currently Managing Director with Digital Prism Advisors where we advise clients on digital and business transformation.

My career spans a wide range of publishing and information products, services and B2B categories and my operating and consulting experience has largely been with brand-name companies such as PriceWaterhouseCoopers, Macmillan, Inc., Berlitz International, AARP, R.R. Bowker and Wolters Kluwer.

I have served as a board member of the Association of American Publishers (AAP), the Book Industry Study Group (BISG) and in addition to my responsibilities at R.R. Bowker, l also served as Chairman of the International ISBN Executive Committee.